SAN FRANCISCO PUBLIC LIBRARY
3 1223 04289 8446
DOO '^•'iP^'TS DEPT.
^ JAN 2 9 1993
BUIJCtET crisis SAN FRANCISCO
PUBLIC LIBRARY
CKGROUND:
( Tc.— ^ 11, I'if'^
Francisco's Charter requires that the Mayor submit a balanced budget to the Board of
Irvisors each June. The process was extended this year due to the state legislature/governor
jlock on the state budget. The State deficit announced in September resuUed in a loss to San
:isco of $53 million in state funding. The Mayor stated: "never since the Great Depression
[e 1930's has the City faced a more grim and troubled financial crisis. ..there will be pain and
ice... tough decisions are inevitable..."
Ictober the Mayor, through his budget office, directed that $15 million of the State funding
lit come from the Public Utilities Commission and its three departments (Water, Hetch
jhy, Muni). Reorganization of PUC functions, elimination of highly paid positions, service
:tions, and fare increases were proposed by the Budget Analyst's Office. The budget
Ipulations which followed in the PUC and other City Commissions and Departments led key
[officials to state to members of the civil grand jury that the 1992-1993 City budget is. .."a
disaster"..., ..."some decisions reflect less than prudent fiscal policy"..., ..."fixes just deferred
[roblems fi"om this year to the next".
\DINGS:
Investigation uncovered the following "fixes":
$19 million was taken from the Transit Impact Development Fund (TIDF) and transferred
b the General Fund to reduce the budget deficit. The TEDF, built up from the fees paid to
he City as part of the cost of downtown development, was to be used to pay for downtown
lansportation improvements through the year 2020. Projects to be funded through the
licpected life of downtown buildings now will have to be covered from other fund sources,
jicluding the General Fund.
$2.5 million was transferred from the Water Department to the general fund as an "equity
jansfer" (departmental capital project funds which are declared surplus to needs, by twenty-
|ve percent, and transferred to the general fund with PUC approval and Comptroller
jrtification under the provisions of San Francisco Charter section 6.407e). The Mayor
jirected that "equity transfers" be repaid in the next fiscal year. Since the Water Department
an enterprise fund. City water user fees will be raised to cover the cost and some
liaintenance will be deferred.
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SAN FRANCISCO PUBLIC LIBRARY
"Sf Graoce. Ju.M lllfTll'''fll lllllll
^ J 3 1223 04289 8446
DOC\'^^"''-''^S DEPT.
JJUDIjET crisis SAN FRANCISCO
PUBLIC LIBRARY
BACKGROUND: _ ^
San Francisco's Charter requires that the Mayor submit a balanced budget to the Board of
Supervisors each June. The process was extended this year due to the state legislature/governor
deadloclc on the state budget. The State deficit announced in September resuhed in a loss to San
Francisco of $53 million in state funding. The Mayor stated: "never since the Great Depression
of the 1930's has the City faced a more grim and troubled financial crisis... there will be pain and
sacrifice... tough decisions are inevitable..."
In October the Mayor, through his budget office, directed that $15 million of the State funding
deficit come from the Public Utilities Commission and its three departments (Water, Hetch
Hetchy, Muni). Reorganization of PUC functions, elimination of highly paid positions, service
reductions, and fare increases were proposed by the Budget Analyst's Office. The budget
manipulations which followed in the PUC and other City Commissions and Departments led key
City officials to state to members of the civil grand jury that the 1992-1993 City budget is... "a
total disaster"..., ..."some decisions reflect less than prudent fiscal policy"..., ..."fixes just deferred
the problems fi"om this year to the next".
FINDINGS:
Our investigation uncovered the following "fixes":
1. $19 million was taken from the Transit Impact Development Fund (TIDF) and transferred
to the General Fund to reduce the budget deficit. The TEDF, built up from the fees paid to
the City as part of the cost of downtown development, was to be used to pay for downtown
transportation improvements through the year 2020. Projects to be funded through the
expected life of downtown buildings now will have to be covered fi^om other fijnd sources,
including the General Fund.
2. $2.5 million was transferred from the Water Department to the general fund as an "equity
transfer" (departmental capital project fiands which are declared surplus to needs, by twenty-
five percent, and transferred to the general fiand with PUC approval and Comptroller
certification under the provisions of San Francisco Charter section 6.407e). The Mayor
directed that "equity transfers" be repaid in the next fiscal year. Since the Water Department
is an enterprise fund. City water user fees will be raised to cover the cost and some
maintenance will be deferred.
EF
52.12
128b
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S.f. PUBLIC LIBHARY
3. $2 5 million was transferred from Hetch Hetchy Water and Power to the general fund as
another "equity transfer". This money is to be taken from the "dry year power purchase
contingency capital program". This is a risk decision. These funds will be required if the
current drought continues. Some maintenance may be deferred.
4. A sale was proposed of Water Department land presently leased to the Olympic Club. This
one time inflow of cash to the general fund will remove from the City's yearly revenue stream
the rental amount of the lease.
5. $1 million was transferred from the Water Department to the Fire Department to manage
the high pressure water lines, Auxiliary Water Supply System. The cost of maintenance and
repair of these lines, which belong to the Fire Department, will be transferred to the Water
Denartmpnt Wot«»r rat^.^ "~ii ^g raised to pay for this action..
m
SAN FRANCISCO
PUBLIC LIBRARY
REFERENCE
BOOK
Not U) be takei^ from the Library
Dartments are facing a budget deficit of over $20 million in the
if these "fixes".
tllion from the Airport Commission was advanced to the general
re airport concessions sales. Interest must be paid. The recent
rogram was a similar adjustment.
general funds, such as property taxes, are down. Federal and
rest loans are anticipated to be severely reduced next year,
icit is expected to be $200 million in fiscal year 1993-1994.
e preceding paragraphs will reduce the budget next fiscal year.
to future budget problems.
DFS established the Joint Task Force to Resolve the City's Fiscal
kittle action has been taken, despite weeks of meetings.
; 1992-1993 budget process is summarized in a quote from
.. (.../ate sin is not so prejudicial as a public indecency."
A blue print for change exists in the Mayor's Fiscal Advisory Committee (MFAC) Report, which
shows that over the years, as San Francisco has enjoyed bountifijl revenues, policy makers have
opted to provide higher and higher levels of service. The study confirms another trend. The
growth rate of expenditures is growing significantly faster than the growth rate of revenues
available to the City. ref 352.12 ci28b
California. Grand Jury
( San Francisco )
Budget crisis /
1993
3 1223 04289 8446
3. $2.5 million was transferred from Hetch Hetchy Water and Power to the general fund as
another "equity transfer". This money is to be taken from the "dry year power purchase
contingency capital program" This is a risk decision. These funds will be required if the
current drought continues. Some maintenance may be deferred.
4. A sale was proposed of Water Department land presently leased to the Olympic Club. This
one time inflow of cash to the general fund will remove from the City's yearly revenue stream
the rental amount of the lease.
5. $1 million was transferred from the Water Department to the Fire Department to manage
the high pressure water lines, Auxiliary Water Supply System. The cost of maintenance and
repair of these lines, which belong to the Fire Department, will be transferred to the Water
Department. Water rates will be raised to pay for this action..
The PUC and its subordinate departments are facing a budget deficit of over $20 million in the
next fiscal year as a direct result of these "fixes".
In other City departments, $25 million from the Airport Commission was advanced to the general
fund from the City's share of fiiture airport concessions sales. Interest must be paid. The recent
"found" money in the retirement program was a similar adjustment.
The historic trends on sources of general funds, such as property taxes, are down. Federal and
state funds, grants and low interest loans are anticipated to be severely reduced next year.
Consequently, the City budget deficit is expected to be $200 million in fiscal year 1993-1994.
None of the actions outlined in the preceding paragraphs will reduce the budget next fiscal year.
In fact, as indicated, they will add to future budget problems.
The Mayor and Board of Supervisors established the Joint Task Force to Resolve the City's Fiscal
Crisis with four working groups. Little action has been taken, despite weeks of meetings.
The Civil Grand Jury view of the 1992-1993 budget process is summarized in a quote from
Cervantes in Don Quixote : "A private sin is not so prejudicial as a public indecency."
A blue print for change exists in the Mayor's Fiscal Advisory Committee (MFAC) Report, which
shows that over the years, as San Francisco has enjoyed bountiful revenues, policy makers have
opted to provide higher and higher levels of service. The study confirms another trend. The
growth rate of expenditures is growing significantly faster than the growth rate of revenues
available to the City. ref 352.12 ci28h
California. Grand Jury
(San Francisco)
Budget crisis /
1993.
Digitized by the Internet Archive
in 2013
http://archive.org/details/budgetcrisis1993cali
RECOMMENDATIONS:
1 . In the future, the Mayor must reject all one-time budget "fixes", such as those outlined in the
Findings.
2. The Mayor and the Board of Supervisors must put aside differences and work together to
spend at or below what is incoming. The unions must cooperate. It is now time to make the
"tough decisions" concerning Charter revision. Civil Service reform, organizational restructuring,
and reductions in the work force.
3. The Mayor must direct Commissioners and Department Heads to consider for implementation
recommendations found in the Mayor's Fiscal Advisory Committee Report and report back on the
status.
Final Report Released January 27, 1993
1992-1993 Civil Grand Jury
City and County of San Francisco
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